Modular Data Centers: What They Are and What They Aren’t

So, you need a data center, and using the cloud or a co-location facility just isn’t an option. What are your choices? You can build one from the ground up, at a cost of between $7 million and $12 million per megawatt—a process that can take years and require extensive expertise and numerous permissions.

Or, you can deploy a modular data center composed of prefabricated components that are shipped and installed with relative ease and speed. This article discusses modular data center design and explores how they work, why they can be a great solution, and when they might not be the best choice.

What is a Modular Data Center?

A modular data center is a data center facility built using pre-constructed components that houses hardware such as computer equipment and storage. It can also hold the same network infrastructure, power management, and cooling capabilities as a traditional data center, however, instead of being built from the ground up, it’s assembled from prebuilt parts.

Other terms such as prefab data center or modular server room are often used interchangeably with “modular,” but the concept remains the same. They can range from a small unit (20 kilowatts, roughly the size of a freezer) to a large system made up of hundreds of prefabricated components.

It’s important to note that the modules used to create a modular data center might not include all the necessary equipment or architecture to function as a fully operational data center. Additional equipment, such as electrical power management tools, may need to be added later in the process.

Different Types of Prefabricated Data Centers

Modular data centers come in a variety of shapes, sizes, and styles. Some modular data center manufacturers build a relatively small base unit (e.g., 10’x10’) and allow the customer to decide how many units they want to add. The resulting data center might be a single 10×10 unit or a connected structure consisting of 100 such units. These scalable units enable customers to “right-size” the solution for a particular use case.

In some cases, it may be a portable data center, which has the ability to move from one place to another. These are used in the military, where it is not feasible to construct a data center in a rugged region.

It may even be made up of shipping containers repurposed to serve as components of a modular data center. This is known as a container data center. This type of containerized data center is useful because it is tough and easy to transport. A containerized version is completely self-contained, generally having everything it needs to function onboard, including power and data center cooling equipment.

7 Advantages of Modular Data Centers

When comparing modular over traditional data centers​, a number of advantages become apparent, assuming the use case is suitable for modular data center solutions. Sometimes, you need a massive, purpose-built data center facility. In those cases, the modular approach is not optimal. Otherwise, here are seven advantages of a modular option.

1. Lower Cost

The modular data center construction​ process is almost always far less costly than that required for a traditional data center —data centers are not like a standard building and require specialized design and construction. For example, a data center has significantly more electrical power and air conditioning capacity than a regular building and has raised floors that may require reinforced construction to accommodate the weight of the hardware.

Data center construction usually requires extensive permitting from municipalities, along with the services of specially trained electrical engineers and contractors with proven experience in data center construction.

In contrast, constructing a modular data center usually requires the construction of a concrete slab and relevant electrical connections. The modular components are installed by an approved installation vendor, which means this process is far less expensive than the alternative.

2. Speed to Deploy

The streamlined construction process makes modular data centers far faster to deploy than a traditional data center. There may be a waiting period to manufacture components, but often, they are ready to go straight away.

The time-to-deploy might be measured in months, versus three or more years for a traditional data center. Some manufacturers even ship modular data centers with the computer hardware already installed and configured.

3. Avoidance of Red Tape

Traditional data centers may run into zoning difficulties and other public obstacles to their construction. However, modular data centers generally avoid some of these problems and face fewer bureaucratic obstacles.

4. Latency

One of the big advantages of a modular data center is the potential to situate it near end users, which drives down the response time, or latency, of its systems. For example, if your end users are in California and your data center is in Virginia, the latency might be in the range of 100 to 200 milliseconds. That might not sound slow, but for certain applications, such as gaming or critical healthcare services, that’s a long time.

High latency is often caused by the physical distance data must travel, coupled with network “hops” that slow down transmission. Relocating the data center closer to end users can reduce latency to as little as 10 milliseconds.

Furthermore, a variety of commercial use cases simply require localized data center deployment. For instance, industrial safety cameras generate such large volumes of image data that it becomes unworkable and prohibitively expensive to store it in the cloud or in a remote data center. Therefore, the only solution is to arrange for data storage on site, ideally using some form of containerized data center.

5. Sustainability

Data center operators are under pressure to demonstrate that their projects are not negatively affecting the environment. Modular data centers can help with this process, partly because their flexible deployment can place them closer to renewable energy sources or natural cooling, e.g., in colder regions of the country.

Transmitting data over long distances also incurs high energy costs. This is an underappreciated aspect of data center sustainability, but moving data across the country comes with a damaging environmental impact. Locating the data center closer to the end user also cuts down on bandwidth costs.

The construction of a traditional data center also incurs considerable diesel carbon emissions compared to pre-cast data centers, which is again often an overlooked factor.

6. Realize an Edge Computing Strategy

Edge computing is a concept that involves deploying computing and storage infrastructure as close to end users as possible, at the “edge” of the network. This contrast with the traditional approach of concentrating most compute and storage resources at the “core” of the network, typically in hyperscale data centers.

Edge computing can mean different things to different people, but the principle tends to favor modular design because edge data centers need to be small and easily deployable. A portable modular data center might be part of this strategy when temporary capabilities are required.

7. Security and Compliance

Modular data centers can improve security posture by controlling the location of systems, while limiting access to the infrastructure. Compliance benefits include the ability to store data in tightly controlled, wholly owned infrastructure.

10 Use Cases for Modular Data Centers

With the clear advantages that a modular data center has over a traditional infrastructure, it makes sense that there are specific use cases for modular. Several use cases are listed below:

1. Branch Offices—Organizations that need a “server room” in each of several branch offices may find it easier to ship a modular data center to the site rather than build a data center or adapt a space into a server room.
2. Internet of Things (IoT)—The IoT is often present in environments where thousands of devices are generating data in locations that are far from the core hyperscale data centers, e.g., in oil and gas fields.
3. Artificial Intelligence (AI)—AI technologies, from analytical pattern recognition applications to large language models (LLMs), need rapid access to significant volumes of data and high-performance computing capabilities. A modular data center may be the best solution because it can deploy storage and computing near AI end users.
4. Robotics—Robots, especially flexible humanoid machines used in industry, are limited in how much computing capacity they can carry on their “bodies.” To function, however, they need a great deal more computing power, ideally located close enough for very low latency.

   A modular data center can solve this problem, placing the compute capacity needed by the robots in the industrial facility where they operate.

5. Event Venues—Stadiums and other event venues have erratic demand for connectivity. They may be empty for weeks at a time but then require connections for thousands of mobile devices. Containerized data center manufacturers have developed effective solutions for this use case. It can also be essential for storing the massive amount of video data created by television cameras at an event.
6. Healthcare—Healthcare facilities require data to be stored on owned infrastructure for purposes of compliance, while avoiding any risk of data center outages. A modular data center can be an effective way to provide this capability quickly and at low cost.

   Latency is also an issue, such as with large electronic imaging files. Modular data centers offer localized, high-performing storage for this data, without the cost of bandwidth to store it remotely.

7. Call Centers—A call center can benefit from the presence of a localized data center with rich fiber-optic connectivity and on-site hardware to support virtual desktop infrastructure (VDI). A modular data center can be a fast, effective solution.
8. Hostile Environments—A data center container is well-suited for environments that are not suitable for construction, even for a modular solution. Examples include offshore oil rigs, mines, and wilderness areas.
9. Military—Forward operating bases may require data centers, such as for downloading massive amounts of reconnaissance imaging data from drones. In these cases, a modular data center is an effective solution and allows flexibility to move into different zones.
10. Bitcoin Mining – Modular data centers are often used in bitcoin mining operations. The rationale is that these data centers can leverage the “free” energy from gas and oil wells that would otherwise go to waste via mining. The data center is temporarily deployed, harnesses the energy, and quickly relocates to the next location.

4 Disadvantages of Modular Data Centers

While modular data centers offer some remarkable solutions for a variety of use cases, they come with their share of challenges. You still need to find a site that has adequate power and fiber-optic bandwidth, just as you would if you were building a data center from scratch.

This can be quite challenging in urban areas, which is ironic: in the locations where they are most needed, they are often the hardest to deploy due to lack of power. For many municipal governments, the idea of allocating more electrical power may not be a viable option when citizens are concerned about environmentalism.

1. Zoning and Permits

Power and bandwidth don’t go away with a modular data center design, and zoning and permits continuing to be potential obstacles to success. For some locations, the low-impact modular construction process may be appealing, but cities may refuse to issue permits for a modular data center for any number of reasons.

2. Issues with Manufacturers’ Certifications

While modular data centers eliminate many building inspection and permitting challenges, the prefabricated units must still comply with relevant state and local regulations. As an example, telecom firms often install switching equipment that was manufactured elsewhere.

Whatever modular data center unit you plan to deploy, it’s critical to check that it complies with local authorities’ regulations. Much of the time, this is not a big problem —for example U.S. states typically have shared regulations, where if it’s approved in Texas, it’s also approved in Florida, and so forth—but this is not always the case.

3. Rising Costs

A modular data center’s price may emerge as a negative factor when you assess its viability for a project. Yes, conventional data center construction prices are high, but modular alternatives are not exactly cheap.

A sampling of modular data centers for sale on the CIRKLA data center marketplace shows prices ranging from $150,000 to over $500,000 per unit. Modular data center cost varies based on size, rackspace, and wattage, but expenses can add up quickly if you need to deploy more than one module or container.

4. Scalability

Building a scalable prefabricated data center can be potentially challenging. On the one hand, they are infinitely scalable as you can just add more modules as needed. However, the problem is that physical space, power, and fiber are not limitless. Even if they were, it doesn’t make economic sense to purchase them in excessive quantities in advance.

For example, if you deploy a 1MW data center based on an assessment of your needs but then discover you need a 10MW facility in the same location, this is unlikely to be feasible. There may not be enough space or power available, and you will then have to start looking for a new site.

When Modular Data Centers Are Not Appropriate

Modular data center vendors are proving to be highly innovative, but their solutions are not always appropriate. For instance, if you need specialized equipment for a specific workload, like GPUs for AI, or other types of customizations, it might require a costly and cumbersome refitting of the modular unit.

Hyperscale use cases are not suitable, either, nor are situations where physical risks are high. For example, in seismic or flood zones, or in places where terrorism or crime present a threat to exposed modular units.

Finally, situations where modular data center cooling is environmentally damaging may also affect their suitability for use. This is especially common, as cooling equipment can be difficult to incorporate into a small, prefabricated modular data center once already built —not to mention the potentially high costs.

Prefabricated, Containerized or Mobile Data Center? Park Place Technologies Can Help

Whether your data center is modular or traditional, you want your hardware operating at peak performance with resources available 24/7. To achieve this, you will need effective data center maintenance and monitoring. Not to mention IT Professional Services to support the process of building or relocating to a new data center.

Our third-party hardware maintenance service ensures your equipment lasts longer without compromising performance, saving you on OpEx and CapEx costs over the long term while guaranteeing your devices remain up-and-running. Even if you have a smaller mobile data center trailer, we’re here to support you.

Thinking of moving your IT equipment to another data center? Our data center relocation services can ease the transition and avoid downtime. Keeping your key infrastructure processes functioning without a blip in performance.

Contact Park Place Technologies today to find out how we can help.